The blockchain and cryptocurrency-related industries have really attracted the investment dollars of the retail crowd in recent quarters. The broad fintech space has been much heated in recent years, thanks in part to the rally in Bitcoin (and other cryptocurrencies) and growing adoption of such digital tokens. Add the rise of stablecoins into the equation, and I think those who haven’t yet gotten any exposure to crypto may wish to do so through shares of a crypto infrastructure play.
Of course, the valuations have grown quite lofty in recent months. And while I wouldn’t chase momentum without putting in proper due diligence, I certainly wouldn’t be afraid to watch promising names in the space or perhaps initiate a “starter” position, provided one understands the downside risks once the next inevitable correction comes for fintech or perhaps the broad market.
In any case, recent IPO Circle Internet Group (NYSE:CRCL) and popular crypto platform play Coinbase (
Let’s check in on the two crypto infrastructure firms, and I’ll give my take on the better bet for the rest of the year.
Key Points
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CRCL and COIN are red-hot crypto infrastructure plays that are rapidly advancing the crypto economy as we know it.
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From the rise of stablecoins to emerging blockchain tech, the following pair of names stand out after their respective year-to-date surges.
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Circle Internet Group
The Circle IPO has been the talk of the town in the weeks and months leading up to its June debut. The stock rocketed as high as $263 and change per share before correcting just over 30%. Today, shares go for around $190 per share, and while CRCL shares are still technically in a bear market, down over 27% from their peak, the name remains up well over 520% in less than two months. That’s an obscene gain that could be given back just as quickly.
In a prior piece, I highlighted that Cathie Wood had taken profits in what was a very successful trade that was met with near-immediate success. For a growth-minded risk-taker like Wood, I wouldn’t be inclined to stick around if she’s ringing the register on a name.
While infrastructure for stablecoins (it issues the well-known USDC stablecoin that’s tied to the greenback) has been booming of late, one must remember that it’s not always boom times for the crypto economy. The next bust could hit at any time, and it’s sure to be a doozy for CRCL. That said, many share the belief that stablecoins are the future. And with that, CRCL stock could have more ground to gain before its next big pullback.
Additionally, Circle’s ambitions may still be underestimated by Wall Street, as the firm looks to expand its portfolio, gain share, and maybe even open a bank. Either way, it’s full speed ahead for the hyper-growth crypto play. At close to 200 times forward price-to-earnings (P/E), though, I’d be inclined to sit this one out, at least for now.
Coinbase
Coinbase had nearly quadrupled in two years, with a nice 293% gain in the books. And while investors have had to ride out some steep drops, I do think COIN stock remains one of the best buy-the-dip types of plays on the market. Today, shares are looking peaky after soaring close to 160% since the start of April (those were the Liberation Day lows).
As the crypto exchange platform looks to get into the business of payments, the firm may have another big revenue stream on its hands. Indeed, with the growing popularity of stablecoins like USDC, perhaps Coinbase is a hub, not just for trading Bitcoin to make a quick buck, but for everyday transactions.
Indeed, Coinbase may very well be on its way to becoming the go-to digital wallet of the future. With a front-row seat to crypto trading, plenty of upside to be had from momentum in stablecoins, and a relatively modest multiple compared to Circle, I’m inclined to favor Coinbase if I had to pick between the two crypto infrastructure heavyweights. Shares go for just north of 71 times forward P/E, which isn’t all that bad, given the growth to be had.
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